Let's Unlearn Stereotypes Before Decision-Making: Assessing the Impact of Intrinsic Bias Mitigation on Downstream Fairness in LLMs

Large Language Models (LLMs) are increasingly used in high-stakes decision-making systems, where biased predictions can reinforce social and economic disparities. Although prior work has examined intrinsic representational bias and unfair downstream behavior separately, it remains unclear whether mitigating intrinsic bias leads to fairer downstream outcomes. We introduce Fairness-Aware Concept Unlearning (FACU), a model-level mitigation method that adapts concept unlearning to fairness-oriented representation balancing. Unlike suppression-based approaches, FACU explicitly regularizes probability differences between stereotypical and anti-stereotypical associations while preserving predictive performance and language modeling quality. We evaluate FACU across three open-source LLMs, multiple intrinsic bias benchmarks, and three socio-economic classification datasets using both frozen LLM embeddings and LoRA-fine-tuned classifiers. FACU produces statistically significant reductions in intrinsic gender bias that are associated with downstream fairness improvements across most evaluated settings, datasets, models, and fairness metrics, without significantly degrading predictive performance. Combining FACU with extrinsic mitigation methods, particularly counterfactual data augmentation, yields further fairness improvements. These findings suggest that fairness-aware intrinsic mitigation can support fairer LLM-based decision-making and that bias mitigation should be addressed across both model development and downstream deployment stages.